Following a detailed review of landlord’s books and records, RRG noted that the landlord had included the cost of certain capital expenditures which, per the lease, were to be excluded from operating expenses. Initially, the landlord disagreed with RRG’s position, but following negotiations which included the landlord, client and each party’s respective legal representatives, RRG achieved a settlement whereby the landlord would exclude sixty percent (60.00%) of the amortized costs of the disputed capital expenditures from operating expenses (“60.00% Capital Model”). In addition, the landlord and the client, via the settlement agreement, specified the future projects which fit the 60.00% Capital Model and agreed that such future projects would be amortized and subjected to the same exclusion model. This agreement by the landlord with the audit results would produce additional annual savings through the remainder of the lease term.

Project Costs
Capital Expenditures

About RRG

RRG is an independent, international consulting and advisory firm specializing in the development and implementation of enterprise-wide lease audit and cost control strategies.